Topic: Student Questions

Brand Portfolio Management

Posted by Anonymous on 125 Points
Why do companies launch a second a third etc number of brands when they have one very strong brand. For example: Coca Cola is a strong brand why have Fanta or Diet Coke. When a company increases its number of SKUs (stock keeping units) does it not jeopardize its strong brand. How can we explain the benefits to the organization, especially to the sales force.

Also, sales teams have trouble couping with a number of brands how can you make the sales team understand the importance of mulit layer of brands?
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  • Posted by Carl Crawford on Member
    hi erhan,

    welcome to KHE,

    well this sounds like a student question to me. please read the "importand guide lines" section #5. if you are a student please tell us what you think! this will help us to help you.

    well let start:

    companys launch multiple brand to meet consumer needs, taking the example of coke. coke is a high sugar drink, and we know that if you consume to much suger you get fat, diet coke was bought in to as a low suger alturnative for the consumers that dont want to get fat but still want to drink coke.

    this is satisfying consumers NEEDS and WANTS.

    if you are in a supermarket and on the shelf is coke and is coke(diet), but they have the same name how are you going to tell they are different? you can tell them apart because they have different packaging and i different name.

    consumers are different, they each have different needs and wants. we cant make a product that is every thing to everyone, so we need to specialise.

    if coke suddenly started to make coke have an orange flavor (eg fanta) and stopped making normal coke, they would lose the people who drink coke (coke flavor).

    they have different brands so they can target different groups of consumers, without alienating people who already enjoy the product that they currently make.

    here are a few past questions:

    also you might want to try a search on under brand extensions
    have a nice day

    Carl Crawford
  • Posted by Mushfique Manzoor on Member
    Hi erhan


    1. As coke has tastes like Cocoa, some consumer might want to have a CSD* which has orangy taste. to meet this consumer groups the brand Fanta is developed.

    In the same way for consumer who want to have less sugar CSD Diet Coke is the brand.

    if you dont have these brands then the consumers of these categories will not have coke and will have brands of some other company which results in your loss of potential sales. To have this incremental sales you develop this brands on top of your exisitng Coke.

    2. the reason of having multiple SKUs are also TO SATISFY CONSUMER NEEDS AND TO RETAIN CONSUMERS.

    example: Coke has 250ml, 500ml and 1 Ltr packs. any one who is now having a 250ml pack @BDT 10** may want to have a some more quantity at some other time. if he doesnt have coke 500ml he either has to buy 2pcs 250ml pack costing BDT 20 or buy a 500ml pack of another brand costing BDT16. Now to get that consumer stick with your brand you have a 500ml pack @BDT 15. again when he wants to treat 10 persons with coke he buys a 1 liter coke @BDT35 rather than buying 10 pcs of 250ml coke costing total BDT150. If coke doesnt have these SKUs then the consumer will buy Pepsi's SKUs and the sales/profit goes to Pepsi not to Coke.

    so buy having these skus you increase sales/profit and retain your existing consumers at a MARGINAL COST. As you know it takes lot less to retain a consumer than to create a new one.

    3. Having multiple skus actually STRENGTHENS the brand as it meets all consumer needs of all circumstances and retains consumers.

    4. The above mentioned reasons are ways you make the sales team understand the importance of multiple SKUs.

    by the way, please fill up your profile so that we all at KHE can know more about you. if you any further query pls contact me by clicking on my name.


    * CSD is Carbonated Soft Drinks
    ** BDT is Bangladeshi Taka (1 USD = 60 BDT)
  • Posted by mgoodman on Member
    If you do a really good job of establishing a brand image and franchise, any product that's different from the branded one will, by definition, not fall within the brand's DNA. It will have a different set of attributes and/or benefits.

    So if you want to introduce that different product and satisfy the needs of different consumers, you wouldn't want to use the same brand name. If you do, you will probably dilute the strength of the franchise. At a minimum, it will confuse loyal customers who have a clear understanding of and appreciation for your current brand.

    That's why companies that really understand branding introduce new products using different brand names. At P&G we had at least six or seven different brands of bar soap -- each with a different brand promise and a different set of attributes, benefits, and characteristics: Ivory, Camay, Zest, Safeguard, Coast, Lava, and Kirk's. (I might have forgotten one ... it's been a few years. And P&G no longer markets all of them.)

    If you were a loyal user of any one of them, you'd have been really confused if you'd opened the wrapper and found one of the others. The brand was a promise that what you got was going to look, feel, smell, and perform the way it did last time and the way P&G said it would.
  • Posted by Mushfique Manzoor on Member
    Hi Steve

    regarding the Pink Grapefruit drink, according to my response, i would say that both Coke and Pepsi will definitely jump into the market. satisfying consumer needs and wants doesnt mean only 1 guy will do and the rest will sit back and watch. Grab a share of that pie also. the more the better.

    And neither did i say that, satisfying consumer needs and wants doesnt also mean that YOU have to create it, it can always be created by someone else. I would prefer the needs & wants are created by someone else but I will make/get the most DOLLAR out of that need, wants ;)

    well, regarding the soft drink dollar you mentioned, whatever we say about meeting needs and wants and retaining consumers, YES it all boils down to pocketing more DOLLARS. i believe in my response i mentioned of keeping consumers at a marginal cost which also leads to INCREMENTAL SALES/PROFIT aka Dollars. the more of INCREMENTAL DOLLARS, the more dominance, the better.

    IMHO, no brand is indespensible, and i AGREE with you that Brand Marketing is all about Dominance of the market (anything related to that word) and the unit is DOLLARS.

  • Posted by mgoodman on Member
    There's an old saying in the pet food business: "None of the marketing effort counts if the dogs don't eat it."

    If you are not satisfying a consumer need, you can stop trying to market your product -- with or without a new brand name. You're only going to sell stuff and make money if consumers spend their money on your product, and they are only going to do that if they believe it is satisfying a real/perceived need.

    When companies get into a share battle, like Coke and Pepsi, it's usually a sign that people don't really think there's a big difference between them and are willing to switch off (from one brand to the other) based on price, availability, or some factor other than the product benefits themselves.

    Now, when marketers try to grab more shelf space, the issue is usually "How can I segment my market smarter than my competitor does?" They're looking to satisfy some new/different consumer need, or appeal to a new/different set of consumers. That's why they introduce a new brand.

    Sure, it's all about sales, share and profit ultimately. But the route to all of those things is satisfying a consumer need. If the dogs don't eat it, it's all a waste of time and money.

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